Airbed manufacturer and retailer Select Comfort Corp., maker of the Sleep Number brand, reported first-quarter net income of $24.5 million, an 89% increase compared with the first quarter of 2016.
Earnings per diluted share increased 107% to $0.56.
Net sales grew 12% to a record $394 million, including a 3% comparable store sales increase. The Minneapolis-based company generated record operating free cash flow of $74 million and repurchased $50 million of the company’s common stock.
Operating income increased by 80% to $36 million, or 9.1% of net sales—350 basis points higher than in the prior-year quarter. The company’s gross margin rate grew 340 basis points to 62.6% of net sales.
Cash from operations was $87 million, a 36% increase compared with the first quarter of 2016.
Return on invested capital was 13.9% for the trailing 12-month period, well above its cost of capital, Select Comfort said.
The airbed maker increased its full-year 2017 earnings outlook to a range of $1.25 to $1.50 per diluted share, compared with the previous outlook of $1.20 to $1.40 per share. The outlook continues to include an estimated $0.15 to $0.22 impact on EPS from incremental costs related to the launch of the Sleep Number 360 “smart” bed line and the redesign of the company’s logistics network, the company said. The outlook assumes high single-digit sales growth, including 4 to 5 percentage points from net new store openings and low single-digit comparable store growth. The company anticipates 2017 capital expenditures to be approximately $55 million.
